US and China play pot and kettle

The United States is not happy China has borrowed a page from the American playbook with respect to government surveillance of data systems.

In an interview with Reuters earlier this week, US President Barack Obama had harsh words for China’s proposed new anti-terrorism law, which will require tech companies to comply with a number of intrusive conditions. China says the new rules are necessary to combat the growing threat of extremism, particularly in the country’s restive far-western regions, and to enhance the security of data systems.

President Obama countered that the measures are unprecedented and unreasonable, and that “this is something they are going to have to change if they are to do business with the United States.”

Among the new measures that will be imposed on tech firms are requirements that encryption keys be provided to Chinese authorities and that system ‘backdoors’ be installed to allow surveillance access. Foreign companies will also be required to physically maintain their servers containing Chinese user data in mainland China, supply communications records to law enforcement authorities, and censor terrorism-related content.

Obama pointed out to Reuters that the new law “would essentially force all foreign companies, including US companies, to turn over to the Chinese government mechanisms where they can snoop and keep track of all the users of those services.”

“As you might imagine tech companies are not going to be willing to do that,” he added.

If Obama’s complaints sound a little disingenuous, the Chinese agree. “Many Western countries, including the US and the UK, they have requested technology enterprises to provide means of disclosure,” a spokesperson for the National People’s Congress was quoted as saying by the Wall Street Journal. The Reuters story also pointed out that late last year the directors of both the FBI and the National Security Agency (NSA) publicly warned companies such as Apple and Google not to use encryption methods that law enforcement investigators cannot break, which elicited only half-hearted protests from the tech giants.

The meddling of the Chinese in data systems around the world and the Internet in their own country is, of course, legendary.

To what extent government should be allowed access to data systems in order to fairly and efficiently carry out their mandate to maintain peace and security is a thorny question, one that is certainly not going to be solved by the two superpowers slinging rhetoric at each other. Nor, for that matter, by the early-morning musings of a newspaper columnist. Instead, we ought to consider the practical implications of the pending new regulations in China.

Apart from security concerns—which to be fair are mostly legitimate—part of the Chinese motivation for the new ‘anti-terrorism’ law is to protect Chinese businesses. The demand for government access to data systems is not going to drive away giants like Google no matter how much they complain about it, because the Chinese market is too valuable; Obama’s thinly-veiled threat that the new rules might adversely affect China’s ability to “do business” with the US was ridiculous, and the Chinese undoubtedly realize that, too.

What the new rules may do, however, and what the Chinese are probably counting on them to do, is to raise some barriers to protect smaller businesses in its rapidly-developing tech sector. The country would like nothing better than to create hundreds of thousands of companies in the mold of Jack Ma’s Alibaba, and helping its own tech sector by keeping the most active competition at bay until domestic companies can capture a dominant share of their own enormous local market makes that more likely to happen.

The bottom line is that China is going to be a more difficult market for tech firms who do not already have a presence there. In his comments the other night, President Obama opined that this will eventually backfire on Chinese planners and cause an economic downturn of some kind. But recent history should have at least impressed the lesson on Obama and everyone else that it is all too easy to underestimate the Chinese; they have an impressive talent for shrugging their way out of political and economic traps.

Countries like the Philippines should look at all this as an opportunity. The Asean region
has an edge over the rest of the world in being a potentially viable alternative to China for companies looking to expand beyond their domestic economies to tap global markets and value chains. From a consumer perspective, we can probably look forward to more choices of steadily-improving products and services from China’s growing tech sector.

Whether all that is worthwhile in a global environment in which we are obliged to resign ourselves to the fact that any information recorded in any way about ourselves, our businesses, our activities, and our personal and professional connections is available to “the authorities”—somewhere, there’s a faceless minion who knows how much money you have in your checking account, and that you’re flirting with that guy from the office—is another question.